Chronic kidney disease is a progressive loss of renal function over a period of months or years most often due to diabetic nephropathy, hypertension, glomerulonephritis or other causes. The disease is tracked by doctors through five stages. Each stage is a progression through an abnormally low and progressively worsening glomerular filtration rate. Stage 1 is mildly diminished renal function, with few overt symptoms. Stage 5 is a severe illness characterized by essentially total kidney failure and requiring some form of renal replacement therapy (dialysis or renal transplant). Stage 5 is also referred to as end-stage renal disease (ESRD) by the U.S. Centers for Medicare and Medicaid Services and U.S. federal legislation regarding the issue.
Patients suffering from ESRD require some from of renal replacement therapy, generally either regular dialysis or a kidney transplant. Approximately 17,100 kidney transplants were performed in the United States in 2006. However, at the same time, approximately 74,000 individuals were awaiting a donor kidney. Individuals awaiting a donor kidney must regularly undergo dialysis to maintain their body's internal equilibrium of water and minerals (such as sodium, potassium, chloride, calcium, phosphorus, magnesium, sulfate) as well as the daily metabolic load of fixed hydrogen ions. This is generally accomplished through thrice weekly hemodialysis or peritoneal dialysis sessions which severely impact patient quality of life.
Dialysis services are generally provided on an outpatient basis at dialysis clinics. The dialysis industry is dominated by two large corporations, Fresenius Medical Care AG (2,388 dialysis clinics in North America, Europe, Latin America and Asia-Pacific as of Dec. 31, 2008) and DaVita, Inc. (1,449 dialysis clinics in the U.S. as of Dec. 31, 2008). The average cost of a single dialysis session among all patients in the United States is approximately $320 dollars. However, this cost is not shared equally among all payers. Larger insurers, such as Aetna, Cigna or any of the various Blue Cross Blue Shield entities, have insured pools large enough to provide the leverage necessary to negotiate reduced fee schedules from dialysis providers. However, individuals and small entities pay, on average, six times the price paid by large risk pools and it is not uncommon for the expense to exceed 15 times the rates paid by the larger pools. Particularly hurt by the imbalance in pricing are self-funded and other medical Plans with one or a few patients suffering from ESRD.
The Medicare approved amount for adult ESRD treatment is currently approximately $245 per dialysis session, of which the government pays 80% and the patient pays 20%. However, due to lack of competition in the marketplace and lack of leverage on the part of most medical Plans, the average provider cost per session for patients covered by such Plans is $1,415. Amounts not covered under the health Plan are potentially billed directly to the dialysis patient who would be responsible to pay out-of-pocket.
Under the Medicare rules, patients suffering from ESRD are generally eligible to enroll in Medicare after three months of treatment, with some patients eligible immediately upon starting treatment. However, Medicare serves as a “secondary payer” for individuals with ESRD who have coverage under a group health Plan during the first 30 months of Medicare entitlement. Thus, the patient's medical Plan is presently the responsible primary payer for dialysis benefits for 33 months before Medicare becomes the primary payer. During this time period the per patient costs to the Plan can exceed $1,000,000.
It would be advantageous for medical Plans to have a mechanism to limit exposure to these high dialysis liabilities without exposing the insured patient to out-of-pocket liability and yet still receive the life extending treatment of kidney dialysis they need.